Kickbacks

Kickbacks: an overview

A "kickback" is a term used to refer to a misappropriation of funds that enriches a person of power or influence who uses the power or influence to make a different individual, organization, or company richer. Often, kickbacks result from a corrupt bidding scheme. Through corrupt bidding, the official can award the contract to a company, even though the company did not place the lowest bid. The company profits by having been awarded the bid and getting to perform the contract. In exchange for this corrupt practice, the company pays the official a portion of the profits. This portion is the “kickback.”

Such a practice falls within a sphere of practices often referred to as “anti-competitive practices.” Organized crime has been traced using kickbacks for many years. Some also consider kickbacks to be a type of bribery.